blog home Property Division Who Keeps the Low House Mortgage Rate After a Divorce?

Who Keeps the Low House Mortgage Rate After a Divorce?

By Nottage and Ward on March 20, 2024

A divorce involves the complex process of dividing assets, including the value of the family home. A home with a more favorable economic climate and a low mortgage rate raises essential questions about the best way to divide this asset for both parties.

Mortgage and Divorce

Issues concerning a property mortgage during a divorce involve more than deciding which party will remain in the home. Both parties must also determine how to manage their financial rights, responsibilities, and future economic well-being.

Homeowner couples face unique challenges in an ever-changing economy, especially with higher mortgage rates now than pre-pandemic rates. Property division has a new challenge: Is it possible to negotiate property division and avoid refinancing at a higher rate? Thankfully, several strategies could protect a low mortgage rate in this situation.

Conventional Methods

Traditionally, dividing equity in a home is part of the property division aspect of divorce. The straightforward solution may be selling the house and splitting the proceeds. In other cases, one party in a divorce may want to continue living in the home. Refinancing the home under that party’s name to release the other from a mortgage may affect the mortgage at a much higher interest rate.


An emerging solution for some divorcing couples is co-ownership. This arrangement allows both parties to maintain their names on the deed and mortgage, preserving the lower interest rate. Co-ownership requires a detailed agreement outlining each person’s contributions and responsibilities, providing a framework that respects both parties’ financial interests. These agreements can serve both parties in a divorce.

Financial Agreements

When one party wishes to remain in the home, agreements can make this possible by allowing the other party to move out but continue co-owning the property. This arrangement often involves the resident partner compensating the other, essentially paying them to maintain their stake in the property. These options are practical solutions that honor the contributions of each party in a divorce.

Sale Leasebacks

Sale leasebacks offer a different solution for dealing with the property and mortgage post-divorce. In this arrangement, one partner sells their interest in the property to the other but leases it back. This approach helps lessen the credit impact of divorce by allowing the selling party to eventually buy back their stake, maintaining continuity in property ownership and financial arrangements.

Assuming Mortgages

Assuming a mortgage is another unique avenue worth exploring, although complex. It involves one party taking over the mortgage entirely in their name to preserve the low mortgage rate, a process that requires negotiations with the lender. This option can be beneficial in safeguarding the interest rate of the existing mortgage.

Arrangements with Higher-Earning Spouses

An innovative financial arrangement involves the higher-earning spouse paying the mortgage as a form of spousal support. This approach not only helps manage the economic burden of the mortgage but also provides an efficient way to handle spousal support.

Property Division in Divorce – Mortgage Rates and the Family Home

Each of these solutions comes with considerations and legal implications, and every divorcing couple has unique needs in property division. Navigating issues surrounding property mortgage rates in divorce requires careful planning to identify the most favorable approach.

It’s essential to consult with a Chicago divorce lawyer who has experience navigating property division and understands how to protect a favorable mortgage rate. With over 30 years of experience, the lawyers at Nottage and Ward, LLP can help. Our attorneys work with our clients to review all legal options and help determine the best way to proceed to ensure you have the financial stability you deserve. Call our Chicago office at (312) 332-2915 today to explore your options.

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